The Effect of Good Corporate Governance on Profit Management with Tax Planning as Intervening Variable on Mining Companies Listed on Indonesia Stock Exchange (2014-2018)

Abstract

This study aims to determine and analyze the influence of good corporate governance on earnings management with tax planning as intervening variable. The number of samples studied were 8 companies from a total of 47 companies which were used as the study population. The sampling was done by using purposive sampling method. The type of company used in this study is mining companies. The data used are financial reports and annual reports of mining companies for 2014-2018 (40 observations) obtained from Indonesia Stock Exchange website. The data analysis technique is by using Partial Least Square with the help of the WarpPLS version 6.0 program. The results of this study indicate that (1) the audit committee has no effect on earnings management. It means that the proportion of independent commissioners and managerial ownership has a negative effect on earnings management, while institutional ownership has a positive effect on earnings management. (2) The audit committee and the proportion of the independent board of commissioners have a negative effect on tax planning, institutional ownership has a positive effect on tax planning while managerial ownership has no effect on tax planning. (3) Tax planning has a positive effect on earnings management, and (4) tax planning mediates the relationship between the audit committee, the proportion of independent commissioners, and institutional ownership of earnings management. However, tax planning does not mediate the relationship between managerial ownership and earnings management.